Its the main question these days .... from the writing above you should take conclusions.
Because of the debt limit the HBD supply is small. Its 1 to 20 in market cap for HIVE atm.
HBD supply can not expand super fast as UST did. This is a pro and a con at the same time. It doesn't allow a significant grow in a fast period of time.... UST did 0 to 18B in just one year.
Even if this small supply somehow becomes weight on the chain, super fast drop in the HIVE price, the HBD price will be lowered, meaning it cant print big amounts of HIVE. Say HIVE price drops to 10 cents in one day. First the feed price that is used for HBD to HIVE conversion will take 3.5 days to adjust to those levels. Meaning no instant massive conversion HBD to HIVE. Next if the super low price stays there for days, at the current level of HBD supply and a 10 cents HIVE, the value of HBD will be 0.5$ from the blockchain, reducing the weight on the chain. If it drops further to say 5 cents, the value of HBD will go to 0.25$, losing the weight and the ability to push the HIVE price even further.
The system has been tested and survived with much less adoption and security mechanics, that it has now.
I think no... HBD, although I have not read much about it has a stabilizer, UST and Luna was kind of centralised because it depended on how the LGF swapped assets to keep UST's peg.
The Luna peg depended on how the swaps were done by the Luna GAurd Foundation team...and it failed.
Here HBD there are clear mechanisms... first I read that HBD supply will not exceed 10% of market cap of Hive...and has more automatic mechanisms if things break... so not like UST...
better we understand how HBD works better and evaluate the risks. I don't know, atleast HBD is in a small scale use now, so it will scale propotionately with sensible mechanisms that Luna lacked...
Hive has a debt limit protection, called haircut rule, which should prevent such a catastrophic scenario. On the other hand, there is a constant pressure to increase the debt limit and print more HBD. Also 20% interest on an algoritmic stablecoin isn't sustainable.
The Haircut prevents the death spiral, but HIVE will still be printed. The best protection is to never implement an instant redemption from HBD to HIVE, which Luna had and what is totally buckers as an idea.
Its the main question these days .... from the writing above you should take conclusions.
Because of the debt limit the HBD supply is small. Its 1 to 20 in market cap for HIVE atm.
HBD supply can not expand super fast as UST did. This is a pro and a con at the same time. It doesn't allow a significant grow in a fast period of time.... UST did 0 to 18B in just one year.
Even if this small supply somehow becomes weight on the chain, super fast drop in the HIVE price, the HBD price will be lowered, meaning it cant print big amounts of HIVE. Say HIVE price drops to 10 cents in one day. First the feed price that is used for HBD to HIVE conversion will take 3.5 days to adjust to those levels. Meaning no instant massive conversion HBD to HIVE. Next if the super low price stays there for days, at the current level of HBD supply and a 10 cents HIVE, the value of HBD will be 0.5$ from the blockchain, reducing the weight on the chain. If it drops further to say 5 cents, the value of HBD will go to 0.25$, losing the weight and the ability to push the HIVE price even further.
The system has been tested and survived with much less adoption and security mechanics, that it has now.
Sounds pretty comforting
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Hive dumped more than x7 times from it's HIGH price. Hive quantity is an unlimited. why it will grow in price? any suggest?
well written
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I think no... HBD, although I have not read much about it has a stabilizer, UST and Luna was kind of centralised because it depended on how the LGF swapped assets to keep UST's peg.
The Luna peg depended on how the swaps were done by the Luna GAurd Foundation team...and it failed.
Here HBD there are clear mechanisms... first I read that HBD supply will not exceed 10% of market cap of Hive...and has more automatic mechanisms if things break... so not like UST...
better we understand how HBD works better and evaluate the risks. I don't know, atleast HBD is in a small scale use now, so it will scale propotionately with sensible mechanisms that Luna lacked...
Anyway...
Hive has a debt limit protection, called haircut rule, which should prevent such a catastrophic scenario. On the other hand, there is a constant pressure to increase the debt limit and print more HBD. Also 20% interest on an algoritmic stablecoin isn't sustainable.
The Haircut prevents the death spiral, but HIVE will still be printed. The best protection is to never implement an instant redemption from HBD to HIVE, which Luna had and what is totally buckers as an idea.
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Really it isn’t?
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LUNA/UST is so famous these days.
And no one want the same thing happens to HIVE :)
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For sure.
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why not. it's possible with every crypto, which has an unlimited quantity. Hive has an unlimited quantity too.